I am sure most of the readers know Avnish Bajaj. He is a successful Indian internet entrepreneur. He co-founded Baazee.com, an auctions portal, sold it off to eBay in 2004 for $50 million, and has been looking after eBay India’s operations as its chairman since then (click for his profile here). Bajaj and Rishi Navani, a former partner with WestBridge Capital or now known as Sequoia Capital India, recently floated a $150-million India VC fund - Matrix Partners India. They will focus on venture investing in consumer services, internet and mobile, media and entertainment, financial services, travel and leisure and so on.
ContentSutra catches up with Bajaj, the Founding Managing Director of Matrix Partners India. Excerpts:

You have raised $150 million for investing in Indian startups. What is the tenure of this fund?
[Avnish Bajaj] It is a 10 year fund - so we have a very long term horizon in mind and would like to invest in companies which can become meaningful in 3 - 7 years.

What will be your investment strategy and what kind of companies/sectors you like?
[Avnish Bajaj] We are a multi-sector, multi-stage consumer services investment firm - not a traditional early stage technology VC firm. More details are at www.matrixpartners.in.

It’s a cliched question to a VC. Nevertheless, we will ask that again. Isn’t too much money chasing too few deals in India?
[Avnish Bajaj] Yes, for later stage private equity (> $15 million) and no for early and growth stage (

< $10 million). It would be good to draw a comparison with the US where there are more 1,000 VC firms - yet the top firms (maybe 10) generate most of the returns and do so consistently. In contrast, there are no more than 5-6 firms right now who even look at investment sizes less than $10 million - so the situation is not as dire as made out by the cliché!

What do you think is the biggest challenge of a VC in India?
[Avnish Bajaj] To work in an environment where the Venture ecosystem is not yet in place - though is making progress. So there aren’t developed Angel or Mentor networks which help entrepreneurs with seed funding and mentoring to make them “VC Ready”. The Entreprenuers have also sometimes not had the Global exposure to make them think BIG instead of incrementally. Again all these are changing slowly - and our endeavor is to help plug some of this gap via our fund as well.

Do you think the current internet boom (if we can call it so) in India is for real?
[Avnish Bajaj] There isn’t an Internet boom yet - but it will happen in the next 3-5 years. Unlike Circa 2000 when there was no market and there was only hype, this time there is a real market. Internet users have grown from 2-3 million to anywheer between 25-50 million (depending on the data source); while mobile users have gone from 5 million to 110 million. So this is very much the real thing - though usage patterns are still in early stages of development on the Internet and will mature a lot more in the coming years.

You are a successful dotcom entrepreneur - a product of the dotcom 1.0. What is the difference you see now compared to, say, five or six years ago?
[Avnish Bajaj] There is a maket this time around! :-) I always say that this is the second coming of the Internet and this time everyone’s “smarter” - the Entrepreneurs, the Investors, the Technology and the Consumers. So a lot more promising companies will get created in this cycle than happened in the first phase, in my opinion.

Since mobile has an upper hand over broadband in India, what kind of business models would you like to see in India?
[Avnish Bajaj] Clearly Mobile Internet business models are more compelling than Internet-only. Since our focus sectors are broad-based consumer services, my advice to the entrepreneurs I meet with is that they should be agnostic to the technology and use all forms of distribution as relevant - Mobile GSM (SMS), Mobile Internet (GPRS), Internet, Telephone (IVR, ASR, and Call Center) and where appropriate even offline such as Magazines as well. We have the opportunity to create compelling consumer services across various channels of access and distribution.

Do you see a web 2.0 bubble?
[Avnish Bajaj] I am not sure what will work as Web 2.0 in India - sometimes I wonder if the entrepreneurs would be better off concentrating on basic Web 1.0 business models for the Indian market with some of the scalability and community aspects of Web 2.0 added in. I have not heard of any of the Indian Web 2.0 start-ups attracting significant funding yet - I think the promising entrepreneurs and companies will bubble up over a period of time and evolve their offerings such that they get traction - and then there may be a little bit of a feeding frenzy at that stage.

Will you do a startup again? If yes, when?
[Avnish Bajaj] Every investment I make is like a mini version of doing a start-up again. Right now I am enjoying the process of identifying promising companies and look forward to exceling in helping build some market leading companies as an investor and thought partner for promising entrepreneurs - which will continue to keep me involved in the start-up experience!

The last question: You still maintain eBay email id. Are you still with eBay?
[Avnish Bajaj] I am still Chairman of eBay India. The day-to-day operations of eBay India have been in the hands of two very able Country Managers for about a year now and they are doing a fabulous job. My role is strategic advisory in nature.